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Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2019
May 14, 2020
Jun. 30, 2019
Document and Entity Information:      
Entity Registrant Name Clinigence Holdings, Inc.    
Document Type 10-K    
Document Period End Date Dec. 31, 2019    
Amendment Flag false    
Entity Central Index Key 0001479681    
Current Fiscal Year End Date --12-31    
Entity Public Float     $ 1,500,000
Entity Common Stock, Shares Outstanding   4,629,179  
Entity Filer Category Non-accelerated Filer    
Entity Emerging Growth Company false    
Entity Small Business true    
Entity Shell Company false    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Well-known Seasoned Issuer No    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Entity Interactive Data Current Yes    
Entity Incorporation, State Country Code DE    
File Number 000-55462    
CONSOLIDATED BALANCE SHEETS - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Current assets    
Cash $ 1,065,434 $ 119,267
Accounts receivable 100,183 186,150
Inventory 26,988 0
Prepaid expenses and other current assets 50,747 0
Total current assets 1,243,352 305,417
Loing-term assets    
Property and equipment, net 83,353 7,612
Other receivable 0 116,964
Right of use asset, net 247,196 0
Intangilbe assets, net 1,535,974 0
Goodwill 3,471,508 0
Deposits and other assets 11,121 19,435
Restricted cash 100,000 0
Total Assets 6,692,504 449,428
Current liabilities    
Accounts payable and accrued expenses 1,752,659 567,006
Accrued interest on notes payable 34,358 0
Due to related parties 128,477 0
Lease liability - current 50,406 0
Deferred revenue 165,560 0
Current portion of convertible notes payable 2,112,060 300,000
Current portion of notes payable 366,933 177,055
Total current liabilities 4,610,453 1,044,061
Long-term liabilities    
Lease liability - long term 223,618 0
Convertible notes payable, net of current portion and discounts 0 299,996
Notes payable, net of current portion and discounts 0 602,724
Total liabilities 4,834,071 1,946,781
Stockholders' equity    
Preferred stock, $.001 par value; authorized - 100,000,000 shares; issued and outstanding - 0 shares in 2019 and 2018, respectively 0 0
Common stock, $.001 par value; authorized - 800,000,000 shares; 4,649,179 and 797,108 shares issued and 4,629,179 and 777,108 shares outstanding as of December 31, 2019 and 2018, respectively 4,649 1,775
Additional paid-in capital 14,422,579 3,953,147
Accumulated deficit (12,568,795) (5,452,275)
Total stockholders' equity (deficiency) 1,858,433 (1,497,353)
Total liabilities and stockholders' equity (deficiency) $ 6,692,504 $ 449,428
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Dec. 31, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Preferred stock, par value $ .001 $ .001
Preferred stock, shares authorized 100,000,000 100,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 800,000,000 800,000,000
Common stock, shares issued 4,649,179 797,108
Common stock, shares outstanding 4,649,179 777,108
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Income Statement [Abstract]    
Sales $ 1,366,419 $ 1,366,996
Cost of Sales 830,443 507,640
Gross profit 535,976 859,356
Operating Expenses    
Research and development 768,103 545,223
Sales and marketing 577,739 208,924
General and Administrative Expense 3,667,178 945,607
Impairment expense 2,257,058 0
Amortization 163,746 0
Total operating expenses 7,433,824 1,699,754
Loss from operations (6,897,848) (840,398)
Other income (expenses)    
Loss on extinguishment of debt (130,140) 0
Interest income 3,626 68
Interest Expense (92,158) (109,799)
Total other income (expenses) (218,672) (109,731)
Net income (loss) $ (7,116,520) $ (950,129)
Basic and fully diluted loss per common share:    
Net loss per common share $ (1.96) $ (0.56)
Weighted average common shares outstanding - basic and fully diluted 3,630,075 1,702,490
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Total
Stockholders' Equity, beginning of period, Value at Dec. 31, 2017 $ 1,694 $ 3,503,228 $ (4,502,146) $ (997,224)
Stockholders' Equity, beginning of period, Shares at Dec. 31, 2017 1,694,103      
Common stock issued for cash, Value $ 81 449,919 450,000
Common stock issued for cash, Shares 80,961      
Net loss     (950,129) (950,129)
Stockholders' Equity, end of period, Value at Dec. 31, 2018 $ 1,775 3,953,147 (5,452,275) (1,497,353)
Stockholders' Equity, end of period, Shares at Dec. 31, 2018 1,775,064      
Common stock issued for cash, Value $ 740 4,111,760 4,112,500
Common stock issued for cash, Shares 739,891      
Common shares cancelled, Value $ (144) 144
Common shares cancelled, Shares (143,642)      
Common stock issued for services, Value $ 212 449,842 450,054
Common stock issued for services, Shares 212,522      
Common stock issued in Qualmetrix acquisition, Value $ 1,125 4,167,094 4,168,219
Common stock issued in Qualmetrix acquisition, Shares 1,124,594      
Effect of merger, value $ 797 836,166 836,963
Effect of merger, shares 797,108      
Warrants issued in connection with issuance of convertible debt 374,178 374,178
Notes payable converted to common stock, Value $ 144 530,248 530,392
Notes payable converted to common stock, Shares 143,642      
Net loss     (7,116,520) (7,116,520)
Stockholders' Equity, end of period, Value at Dec. 31, 2019 $ 4,649 $ 14,422,579 $ (12,568,795) $ 1,858,433
Stockholders' Equity, end of period, Shares at Dec. 31, 2019 4,649,179      
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (7,116,520) $ (950,129)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation 15,723 522
Amortization 156,092 2,685
Non cash interest expense 140,487 0
Stock-based compensation expense 450,054 155,886
Impairment expense 2,257,058 0
Loss on extinguishment of debt 130,140 0
Changes in operating assets and liabilities:    
Accounts Receivable 111,567 (82,089)
Prepaid expenses and other current assets (45,280) 0
Deposits and other assets 10,264 (9,171)
Accounts payable and accrued expenses (304,441) 402,247
Lease liability (11,238) 0
Deferred revenue 165,260 0
NET CASH USED IN OPERATING ACTIVITIES (4,040,578) (480,049)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment (84,002) 0
Advances to acquisition target (577,046) (116,964)
Increase in restricted cash (100,000) 0
Cash acquired from acquisitions 12,852 0
NET CASH PROVIDED BY INVESTING ACTIVITIES (748,196) (116,964)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from subsidiary contributions, net 0 367,300
Proceeds from issuance of notes and convertible notes payable 2,359,700 404,997
Proceeds from sale of common stock 4,112,500 0
Proceeds from issuance of related party notes payable 0 144,000
Payments on notes and convertible notes payable (737,259) (156,726)
Payments on related party notes payable 0 (55,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,734,941 704,571
NET INCREASE IN CASH 946,167 107,558
CASH - BEGINNING OF YEAR 119,267 11,709
CASH - END OF YEAR 1,065,434 119,267
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Cash paid during the period for Interest 75,882 93,012
Non-cash investing and financing activities:    
Right of use asset added for operating lease 285,262 0
Notes payable converted to common stock 399,996 0
Notes payable converted to convertible notes payable 32,500 0
Accrued interest converted to convertible notes payable 22,500 0
Accrued salaries converted to convertible notes payable 30,375 0
Common stock issued for acquisitions 5,005,182 0
Intangible assets acquired 7,281,555 0
Warrant issued for convertible debt $ 374,178 $ 0
Note 1 - Organization and Basis of Presentation
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 1 - Organization and Basis of Presentation

Note 1 - Organization and Basis of Presentation

 

The consolidated financial statements presented are those of Clinigence Holdings, Inc., formerly known as iGambit Inc., (the “Company”) and its wholly-owned subsidiaries, Clinigence Health, Inc. (“Clinigence”) and HealthDatix, Inc. (“HealthDatix”). The Company’s name was changed to Clinigence Holdings, Inc. on October 29, 2019 in connection with a reverse merger. In October 2018, Clinigence was incorporated as a wholly-owned subsidiary of Clinigence LLC. The Company is a population health analytics company that provides turnkey SaaS solutions that enable connected intelligence across the care continuum by transforming massive amounts of data into actionable insights. The Company’s solutions help healthcare organizations throughout the United States improve the quality and cost-effectiveness of care, enhance population health management and optimize provider networks. The Company enables risk-bearing healthcare organizations achieve their objectives on the path to value-based care. The Company’s platform automatically extracts and delivers targeted data insights from its cloud-based analytics engine directly to the workflows and technologies of its customers. This enhances end-user workflows with actionable analytics, seamlessly delivers data from disparate sources to the point of engagement, automates the delivery of data to ensure on-time access, and reduces dependency on non-essential applications from the end-user’s workflow. All of this allows the healthcare organization to enable population health management, manage cost and utilization, improve quality, identify gaps in care, risk stratify and target patients, increase collaboration among providers and to optimize network provider performance.

 

Business Acquisitions

 

A) Reverse Merger

 

On August 8, 2019, iGambit, Inc. entered into an Agreement and Plan of Merger (the “Reverse Merger Agreement”) by and among Clinigence Health, Inc., a Delaware corporation (“Clinigence”), iGambit, Inc., a Delaware corporation (“iGambit” or the “Company”), HealthDatix, Inc., a Delaware corporation and wholly owned subsidiary of iGambit (“Merger Sub”), and John Salerno, an individual and holder of shares of iGambit capital stock constituting a majority of the votes eligible to be cast by all of the stockholders of iGambit (the “Signing Stockholder”). The transactions contemplated by the Reverse Merger Agreement were consummated on October 29, 2019 (the “Closing”).

 

The Reverse Merger Agreement provided for the merger of Merger Sub with and into Clinigence, hereafter referred to as the “Acquisition.” As a result of the Acquisition, Merger Sub ceased to exist, and Clinigence became the surviving corporation and a direct wholly owned subsidiary of iGambit, and the former stockholders of Clinigence (the “Clinigence Stockholders”) have a direct equity ownership and controlling interest in iGambit. Merger Sub was renamed Clinigence Health Inc. iGambit was renamed Clinigence Holdings, Inc. Merger Sub was originally incorporated in Delaware on October 17, 2013 and had no operating activity prior to the reported transaction.

 

At the Closing, all of the outstanding shares of Clinigence common stock (the “Clinigence Shares”) were converted solely into the right to receive a number of shares of iGambit common stock (the “Company Shares”) such that the holders of outstanding equity of Clinigence immediately prior to the Closing own 85%, on a fully-diluted basis, of the outstanding equity of iGambit immediately following the Closing, and holders of outstanding equity of iGambit immediately prior to the Closing own 15%, on a fully-diluted basis, of the outstanding equity of iGambit. For each share of Clinigence Shares, each former Clinigence Stockholder received 0.22489093 shares of Company Shares after giving effect to the reverse stock split.

 

The Business Combination was treated as a “reverse acquisition” for accounting purposes, whereby Clinigence is considered the acquirer for accounting purposes, and the historical financial statements before the Business Combination have been replaced with the historical financial statements of Clinigence and its subsidiaries before the Business Combination.

 

In connection with the Acquisition, the Company amended its certificate of incorporation to (i) effect a reverse stock split of the Company Shares at a ratio of 1 for 500 (the “Reverse Split Certificate of Amendment”), and (ii) change its name to Clinigence Holdings, Inc. (the “Name Change Certificate of Amendment”).

 

The following table represents the fair value of the consideration paid allocated to the assets and liabilities acquired in applying the acquisition method for the completion of the reverse merger:

 

Consideration:   
Issuance of 797,108 shares of common stock  $836,963 
Net liabilities assumed   1,467,897 
Total consideration  $2,304,860 
      
Assets Acquired:     
Current assets  $46,209 
Property, equipment, and other non-current assets   1,593 
Goodwill   2,257,058 
Total assets acquired  $2,304,860 

 

B) QualMetrix Acquisition

 

On March 1, 2019, prior to the reverse merger referred to above, the Company entered into a Contribution Agreement by and among Clinigence Holdings, Inc. (“Holdings”), Qualmetrix, Inc. (“QMX”), and the Members of Clinigence, LLC (“Agreement”) whereby Clinigence Holdings, Inc. acquired all of the assets and operations and assumed all of the liabilities of Qualmetrix, Inc. The Company acquired QMX to further its SAAS-based offerings to its customers and expand into new markets. The goodwill is derived largely from the expected growth of the Company, as well as synergies and economies of scale expected from combining the operations of QMX with the Company. Pursuant to the Agreement, all of the outstanding Series A and Series B Preferred Stock and Common Stock of Qualmetrix, Inc. totaling 34,726,659 shares were exchanged for 5,021,950 common shares of Clinigence Holdings, Inc. All outstanding shares of Qualmetrix, Inc. immediately preceding the exchange were treated as one class. On the date of the transaction, the shares of common stock issued to Qualmetrix, Inc. had an estimated fair value of $0.83 per share based on an independent valuation.

 

The following table represents the fair value of the consideration paid allocated to the assets and liabilities acquired in applying the acquisition method for the completion of the Qualmetrix, Inc. business combination:

 

Consideration:   
Issuance of 5,021,950 shares of common stock  $4,168,219 
Net liabilities assumed   989,805 
Total consideration  $5,158,024 
      
Assets Acquired:     
Current assets  $24,698 
Property, equipment, and other non-current assets   7,818 
Identifiable intangible assets   1,654,000 
Goodwill   3,471,508 
Total assets acquired  $5,158,024 
Note 2 - Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 2 - Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Clinigence Health, Inc., and HealthDatix Inc.All intercompany accounts and transactions have been eliminated.

 

Use of Estimates in the Preparation of Financial Statements

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

 

Fair Value Measurements

 

The Company adopted the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

 

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.

 

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level 1 – quoted prices in active markets for identical assets or liabilities

 

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

 

Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

 

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

 

Revenue Recognition

 

Revenue is generated primarily by software licenses, training, and consulting. Software licenses are provided as SaaS-based subscriptions that grants access to proprietary online databases and data management solutions. Training and consulting are project based and billable to customers on a monthly-basis or task-basis.

 

Revenue from training and consulting are generally recognized upon delivery of training or completion of the consulting project. The duration of training and consulting projects are typically a few weeks or months and last no longer than 12 months.

 

SaaS-based subscriptions are generally marketed under multi-year agreements with annual, semi-annual, quarterly, or month-to-month renewals and revenue is recognized ratably over the renewal period with the unearned amounts received recorded as deferred revenue. For multiple-element arrangements accounted for in accordance with specific software accounting guidance, multiple deliverables are segregated into units of accounting which are delivered items that have value to a customer on a standalone basis.

 

On January 1, 2019, the Company adopted the new revenue recognition standard Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, using the modified retrospective method. The modified retrospective adoption used by the Company did not result in a material cumulative effect adjustment to the opening balance of accumulated deficit. Revenue from substantially all the Company’s contracts with customers continues to be recognized over time as performance obligations are satisfied.

 

The Company provides its customers with software licensing, training, and consulting through SaaS-based subscriptions. This subscription revenue represents revenue earned under contracts in which the Company bills and collects the charges for licensing and related services. The Company determines the measurement of revenue and the timing of revenue recognition utilizing the following core principles:

 

1.Identifying the contract with a customer;
2.Identifying the performance obligations in the contract;
3.Determining the transaction price;
4.Allocating the transaction price to the performance obligations in the contract; and
5.Recognizing revenue when (or as) the Company satisfies its performance obligations.

 

Revenues from subscriptions are deferred and recorded as deferred revenue when cash payments are received in advance of the satisfaction of the Company’s performance obligations and recognized over the period in which the performance obligations are satisfied. The Company completes its contractual performance obligations through providing its customers access to specified data through subscriptions for a service period, and training on consulting associated with the subscriptions. The Company primarily invoices its customers on a monthly basis and does not provide any refunds, rights of return, or warranties to its customers.

 

Advertising Costs

 

The Company expenses advertising costs as incurred. Advertising costs of $115,647 and $0 were charged to operations for the years ended December 31, 2019 and 2018, respectively.

 

Cash and Cash Equivalents

 

Cash and cash equivalents are comprised of cash and highly liquid investments with original maturities of 90 days or less at the date of purchase. The Company does not have any cash equivalents as of December 31, 2019 and 2018. The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured.

Accounts Receivable

 

The Company analyzes the collectability of accounts receivable from continuing operations each accounting period and adjusts its allowance for doubtful accounts accordingly.  A considerable amount of judgment is required in assessing the realization of accounts receivables, including the creditworthiness of each customer, current and historical collection history and the related aging of past due balances.  The Company evaluates specific accounts when it becomes aware of information indicating that a customer may not be able to meet its financial obligations due to deterioration of its financial condition, lower credit ratings, bankruptcy or other factors affecting the ability to render payment.

 

Inventory

 

Inventory consisting of finished products is stated at the lower of cost or net realizable value.

Property and equipment and depreciation

 

Property and equipment are stated at cost. Maintenance and repairs are charged to expense when incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income. Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets as follows:

 

Office equipment and fixtures   5 - 7 years 
Computer hardware   5 years 
Computer software   3 years 
Development equipment   5 years 

Amortization

Intangible assets are amortized using the straight line method over the estimated lives of the respective assets as follows:

 

Developed technology   13 years 
Customer relationships   10 years 

 

Long-Lived Assets

 

The Company assesses the valuation of components of its property and equipment and other long-lived assets whenever events or circumstances dictate that the carrying value might not be recoverable. The Company bases its evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, the Company determines whether an impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the estimate of undiscounted cash flows during the estimated useful life of the asset is less than the carrying value of the asset, the Company recognizes a loss for the difference between the carrying value of the asset and its estimated fair value, generally measured by the present value of the estimated cash flows.

 

Deferred Revenue

 

Deposits from customers are not recognized as revenues, but as liabilities, until the following conditions are met: revenues are realized when cash or claims to cash (receivable) are received in exchange for goods or services or when assets received in such exchange are readily convertible to cash or claim to cash or when such goods/services are transferred. When such income item is earned, the related revenue item is recognized, and the deferred revenue is reduced. To the extent revenues are generated from the Company’s support and maintenance services, the Company recognizes such revenues when services are completed and billed. The Company has received deposits from its various customers that have been recorded as deferred revenue and presented as current liabilities in the amount of $165,560 and $0 as of December 31, 2019 and 2018, respectively.

 

Stock-Based Compensation

 

The Company accounts for its stock-based awards granted under its employee compensation plan in accordance with ASC Topic No. 718-20, Awards Classified as Equity, which requires the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value on the date of grant and recognition of compensation expense over the related service period for awards expected to vest.  The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock options and warrants. The Black-Scholes option pricing model requires the input of highly subjective assumptions including the expected stock price volatility of the Company’s common stock, the risk free interest rate at the date of grant, the expected vesting term of the grant, expected dividends, and an assumption related to forfeitures of such grants.  Changes in these subjective input assumptions can materially affect the fair value estimate of the Company’s stock options and warrants.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC Topic No. 740, Income Taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

 

The Company applies the provisions of ASC Topic No. 740 for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the Company’s financial statements. In accordance with this provision, tax positions must meet a more-likely-than-not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position.

 

Recent Accounting Pronouncements

 

We have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the condensed consolidated financial statements as a result of future adoption.

Note 3 - Going Concern
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 3 -Going Concern

Note 3 – Going Concern

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has an accumulated deficit of $12,568,795, and a working capital deficit of $3,367,101 at December 31, 2019. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.  The Company’s continuation as a going concern is dependent upon its ability to obtain necessary equity financing and ultimately from generating revenues from its newly acquired subsidiary to continue operations. The Company expects that working capital requirements will continue to be funded through a combination of its existing funds and further issuances of securities. Working capital requirements are expected to increase in line with the growth of the business. Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund operations over the next twelve months. The Company has no lines of credit or other bank financing arrangements. The Company has financed operations to date through the proceeds of a private placement of equity and debt instruments.  In connection with the Company’s business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. The Company intends to finance these expenses with further issuances of securities, and debt issuances. Thereafter, the Company expects it will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to current stockholders. Further, such securities might have rights, preferences or privileges senior to common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict business operations.

 

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 - Property and Equipment
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 4 - Property and Equipment

Note 4 – Property and Equipment

 

Property and equipment are carried at cost and consist of the following at December 31, 2019 and 2018:

 

   2019  2018
Office equipment and fixtures  $109,468   $13,327 
Computer hardware   44,866    7,941 
Computer software   16,121    —   
Less: Accumulated depreciation   87,102    13,656 
   $83,353   $7,612 

 

Depreciation expense of $15,723 and $522 was charged to operations for the years ended December 31, 2019 and 2018, respectively.

Note 5 - Intangible Assets
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 5 - Intangible Assets

Note 5 – Intangible Assets

 

The following tables provide detail associated with the Company’s acquired identifiable intangible assets:

 

   As of December 31, 2019
    

Gross Carrying

Amount

    

Accumulated

Amortization

    

Net Carrying

Amount

    

Weighted

Average

Useful Life

(in years)

 
Amortized intangible assets:                    
Customer relationships  $624,000   $(52,000)  $572,000    10 
Developed technology   1,030,000    (66,026)   963,974    13 
Total  $1,654,000   $(118,026)  $1,535,974      

 

Aggregate Amortization Expense:   
For the year ended December 31, 2019  $118,026 
Note 6 - Operating Lease
12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Note 6 - Operating Lease

Note 6 – Operating Lease

 

The Company determines if a contract is, or contains, a lease at contract inception. Operating leases are included in operating lease right-of-use ("ROU") assets, current portion of operating lease liabilities and operating lease liabilities, net of current portion in the Company's consolidated balance sheets. Finance leases are included in property and equipment, current portion of finance lease obligations and finance lease obligations, net of current portion in the Company's unaudited consolidated balance sheets.

 

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. In addition, ROU assets include initial direct costs incurred by the lessee as well as any lease payments made at or before the commencement date and exclude lease incentives. The Company used the implicit rate in the lease in determining the present value of lease payments. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of one year or less are generally not included in ROU assets and liabilities.

 

Operating lease ROU assets and operating lease liabilities are recorded on the consolidated balance sheet as follows:

   December 31,
   2019
Operating Lease:     
Operating lease right-of-use assets, net  $247,196 
Current portion of operating lease liabilities   50,406 
Operating lease liabilities, net of current portion   223,618 

 

As of December 31, 2019, the weighted-average remaining lease term of the operating lease was 4.50 years. The weighted-average discount rate for the operating lease was 6.75%.

 

The following table summarizes maturities of operating lease liabilities based on lease term as of December 31, 2019:

 

2020  $67,371 
2021   69,393 
2022   71,474 
2023   73,619 
2024   37,729 
Total lease payments   319,586 
Less: Imputed interest   45,562 
Present value of lease liabilities  $274,024 

 

At December 31, 2019, the Company had the following future minimum payments due under the non-cancelable lease:

 

2020  $67,371 
2021   69,393 
2022   71,474 
2023   73,619 
2024   37,729 
Total minimum lease payments  $319,586 

 

Consolidated rental expense for all operating leases was $126,944 and $65,000 for the years ended December 31, 2019 and 2018, respectively.

 

The following table summarizes the cash paid and related right-of-use operating lease recognized for the year ended December 31, 2019.

 

   Year Ended
   December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:     
Operating cash flows from operating leases  $27,387 
Right-of-use lease assets obtained in the exchange for lease liabilities:     
Operating leases   11,238 
Note 7 - Earnings (Loss) Per Common Share
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 7 - Earnings (Loss) Per Common Share

Note 7 - Earnings (Loss) Per Common Share

 

The Company calculates net income (loss) per common share in accordance with ASC 260 “Earnings Per Share” (“ASC 260”). Basic and diluted net earnings (loss) per common share was determined by dividing net earnings (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive shares, which include outstanding common stock options, common stock warrants, and convertible debt have not been included in the computation of diluted net loss per share for the years ended December 31, 2019 and 2018 as the result would be anti-dilutive.

 

   Years Ended
   December 31,
   2019  2018
Stock options   48,854    —   
Stock warrants   1,065,251    138,997 
Total shares excluded from calculation   1,114,105    138,997 
Note 8 - Stock Based Compensation
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 8 - Stock Based Compensation

Note 8 – Stock Based Compensation

 

Options

 

In 2019, the Company adopted the 2019 Omnibus Equity Incentive Plan (the "2019 Plan").   Awards granted under the 2019 Plan have a ten-year term and may be incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units or performance shares. The awards are granted at an exercise price equal to the fair market value on the date of grant and generally vest over a four year period.

 

Stock option activity during the years ended December 31, 2019 and 2018 follows:

 

   Options Outstanding  Weighted Average Exercise Price  Weighted Average Remaining Contractual Life (Years)
Options outstanding at December 31, 2017    —      $ —        —    
No option activity    —        —        —    
Options outstanding at  December 31, 2018   —      —      —   
Options granted   48,854    5.11      
Options outstanding at  December 31, 2019   48,854   $5.11    8.05 

 

Options outstanding at December 31, 2019 consist of:

 

Date Issued  Number Outstanding  Number Exercisable  Exercise Price  Expiration Date
August 5, 2019   44,854    44,854   $5.56   August 5, 2029
October 29, 2019   400    400   $0.01   March 24, 2020
October 29, 2019   3,600    3,600   $0.0725   June 6, 2027
Total   48,854    48,854         

 

Warrants

 

In 2018, the Company issued fully vested warrants to investors as part of a private placement offering. Each unit offered in the private placement consisted of one share of common stock, and a warrant convertible into 0.4 shares of common stock at an exercise of $1.50 per whole share. The warrants are exercisable for a period of five years from the date of issuance. The warrants were cancelled on March 1, 2019 and reissued upon the Qualmetrix acquisition and are each convertible into one share of common stock at an exercise price of $6.67 per share until December 31, 2024.

  

In November 2019, the Company issued fully vested warrants to investors as part of private placement subscription agreements pursuant to which the Company issued convertible promissory notes. Each noteholder received warrants to purchase common stock of 50% of the principal at an exercise price of $5.56 per share with an expiration date of October 31, 2025.

 

Warrant activity during the years ended December 31, 2019 and 2018 follows:

 

  

Warrants

Outstanding

 

Weighted Average Exercise

Price

  Weighted Average Remaining Contractual Life (Years)
Warrants outstanding at December 31, 2017   91,365   $0.44    1.58 
Warrants granted   47,632    1.50      
Warrants outstanding at December 31, 2018   138,997   $0.81    5.55 
Warrants granted   1,065,251    6.04      
Warrants cancelled   (138,997)   0.81      
Warrants outstanding at December 31, 2019   1,065,251   $6.04    5.17 

 

Warrants outstanding at December 31, 2019 consist of:

 

Date Issued  Number Outstanding  Number Exercisable  Exercise Price  Expiration Date
March 21, 2019   96,433    96,433   $6.67   December 31, 2024
April 30, 2019   3,598    3,598   $6.67   December 31, 2024
May 13, 2019   14,393    14,393   $6.67   December 31, 2024
May 28, 2019   199,703    199,703   $6.67   December 31, 2024
June 5, 2019   7,197    7,197   $6.67   December 31, 2024
June 25, 2019   208,361    208,361   $6.67   December 31, 2024
September 6, 2019   25,188    25,188   $6.67   December 31, 2024
October 29, 2019   1,500    1,500   $25.00   February 5, 2023
October 29, 2019   1,500    1,500   $25.00   April 27, 2023
November 15, 2019   39,000    39,000   $1.25   October 31, 2025
November 15, 2019   204,651    204,651   $5.56   October 31, 2025
November 19, 2019   260,312    260,312   $5.56   October 31, 2025
December 31, 2019   3,415    3,415   $5.56   October 31, 2025
Total   1,065,251    1,065,251         
Note 9 - Convertible Notes Payable
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 9 - Convertible Notes Payable

Convertible notes payable consisted of the following at December 31, 2019 and 2018:

 

   2019  2018
Notes payable convertible into CLNH common units at $.44 per unit; nominal interest rate of 5%; matured in March 2019  $—     $200,000 
Notes payable convertible into CLNH common units at $.59 per unit; nominal interest rate of 12%; matured at various dates from August 2019 to August 2021; converted in May 2019   —      399,996 
Notes payable convertible into Clinigence common shares at $5.56 per share; nominal interest rate of 10%; maturing in October 2020   2,016,723    —   
Notes payable convertible into Clinigence common shares at $1.25 per share; nominal interest rate of 10%; maturing in October 2020   95,337    —   
Total convertible notes payable   2,112,060    599,996 
Current portion   (2,112,060)   (300,000)
Total convertible notes payable, net  $—     $299,996 
Note 10 - Note Payable
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 10 - Note Payable

Note 10 – Notes Payable

 

Notes payable consisted of the following at December 31, 2019 and 2018:

 

   2019  2018
Notes payable with maturities between six months and twelve months from the date of issuance with annual percentage interest rates between 24% and 31%  $63,226   $63,448 
Demand note payable issued to former officers of Qualmetrix, Inc. with an annual percentage interest rate of 8%   16,200    —   
Note payable issued in May 2013 with a maturity date of May 2023 and interest rate of Prime + 2% (6.75% and 7.5% at December 31, 2019 and 2018, respectively)   —      267,137 
Note payable issued in June 2017 with a maturity date of June 2022 and effective interest rate of 10.66%   287,507    449,194 
Total notes payable   366,933    779,779 
Current portion   (366,933)   (177,055)
Total notes payable, net  $—     $602,724 

 

Beginning in April 2018, the Company entered into a series of short-term notes with interest rates ranging from 24% to 31% per annum. Throughout the year ended December 31, 2019 the Company made average monthly principal and interest payments approximating $8,200 per month. The outstanding balance on the short-term notes at December 31, 2019 and December 31, 2018 was $63,226 and $63,448, respectively.

 

In October 2017, Qualmetrix entered into demand notes with its former Chief Executive Officer totaling $100,000. In January through April 2018, the Company issued additional notes to its former Chief Executive Officer totaling $92,000 maturing one year from the date of issuance. In April 2019, one of the notes was settled via a cash payment of interest and principal totaling $195,789. The outstanding balance of the note issued in January 2018 was $16,200 at December 31, 2019 and includes accrued interest of $1,200.

 

In May 2013, the Company entered into a note agreement with a financial institution whereby it received net working capital proceeds of $500,000. The Company made monthly principal and interest payments approximating $6,000 per month including a variable interest rate of Prime plus 2% (6.75% as of December 31, 2019). The outstanding balance at December 31, 2019 and December 31, 2018 was $0 and $267,137, respectively.

  

In June 2017, the Company entered into a Revenue Loan Investment for net working capital proceeds of $500,000. The Company is required to make monthly principal and interest payment on the Revenue Loan based on its net cash receipts from operations in the following 3 tiers:

 

Tier 1 – Payments at a rate of 6.0% of the net cash receipts from the immediate month prior until cumulative loan payments are based on $2,500,000 of net cash receipts.
Tier 2 – After achieving loan payments based on $2,500,000 of net cash receipts in a loan year, additional payments are based on 3.0% of amounts in excess of the Tier 1 Cap.
Tier 3 – Payments at a rate of 0.5% of net cash receipts in excess of $3,200,000 in a loan year.

 

From the inception of the Revenue Loan in June 2017 through December 31, 2019 the Company has paid its monthly principal and interest payments based on the Tier 1 net cash receipts.

Note 11 - Stock Transactions
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 11 - Stock Transactions

Note 11 – Stock Transactions

 

Designation of Preferred Stock

 

On August 2, 2018, the Company filed a Certificate of Designation with the Delaware Division of Corporations whereby the Company designated a Series A Preferred Stock and issued 1,000 shares to the Company’s CEO. The holders of Series A Preferred Stock will have voting rights, when combined with their existing holdings of the Company’s common stock, that entitle them to have an aggregate of 51% of the votes eligible to be cast by all stockholders with respect to all matters brought before a vote of the stockholders of the Company. In connection with the Clinigence reverse merger on October 29, 2019, the Company filed a Certificate of Withdrawal of the Certificates of Designation, Preferences and Rights of the Series A Preferred Stock with the Delaware Secretary of State and returned all previously designated shares to their status as authorized preferred stock available for issuance.

 

Reverse Stock Split

 

On October 25, 2019, prior to the Clinigence reverse merger agreement, the Company effected a 1-for-500 reverse stock split of its common stock. On the effective date of the reverse stock split, each 500 shares of outstanding common stock were reduced to one share of common stock. All share and per share information presented have been adjusted on a retrospective basis to reflect this 1-for-500 reverse stock split.

 

Common Stock Issued

 

On August 8, 2018, the Board unanimously approved an amendment to the Company’s Articles of Incorporation to increase the number of shares of Common Stock which the Company is authorized to issue from Four hundred million (400,000,000) to Eight Hundred Million (800,000,000) shares of Common Stock, $0.001 par value per share.

 

In connection with the reverse merger acquisition the shareholders of iGambit retained 797,108 common shares with a value of $1.05 per share.

 

In connection with the acquisition of Qualmetrix the Company issued 1,124,594 common shares valued at $3.71 per share to the shareholders of Qualmetrix on March 1, 2019.

 

The Company sold 739,891 shares of common stock to various investors valued at $5.56 per share in the fourth quarter of 2019 for proceeds of $4,112,500.

 

The Company issued 212,522 restricted common shares for services in connection with the Qualmetrix acquisition on March 1, 2019, valued at $308,157.

 

In connection with the convertible notes payable (see Note 9 above) the noteholders converted $399,996 of principal balance to 143,642 shares of common stock during the year ended December 31, 2019. The stock issued was determined based on the terms of the convertible notes.

 

During the year ended December 31, 2018, the Company sold 80,961 shares of common stock to various investors valued at $5.56 per share in the fourth quarter of 2018 for proceeds of $450,000.

Note 12 - Income Taxes
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 12 - Income Taxes

Note 12 - Income Taxes

 

Prior to March 1, 2019, the Company operated as a Limited Liability Company (“LLC”). Taxable income and losses of an LLC are passed through to its members and there is no entity level tax.

 

The reconciliation between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense (benefit) for the year ended December 31, 2019 is as follows:

 

Statutory U.S. federal income tax rate   21.0%
Tax effect of expenses that are not deductible for income tax purposes   (9.0)%
Change in Valuation Allowance   (12.0)%
Effective tax rate   0.0%

 

At December 31, the significant components of the deferred tax assets (liabilities) are summarized below:

 

   2019  2018
Deferred Tax Assets:          
    Net Operating Losses  $1,043,303   $—   
           
Deferred Tax Liabilities   —      —   
Valuation Allowance   (1,043,303)   —   
Net deferred tax assets  $—     $—   

 

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings.

 

Due to the changes in ownership of the Company in connection with the reverse merger referred to in Note 1, pre-merger net operating loss carryforwards (computed in accordance with IRS section 382) have been reduced. These NOLs begin to expire in 2028.   In addition, losses incurred from the date of the merger to December 31, 2019 are available to reduce future taxable income. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax assets for every period because it is more likely than not that all of the deferred tax assets will not be realized.

 

In accordance with ASC 740, a valuation allowance must be established if it is more likely than not that the deferred tax assets will not be realized. This assessment is based upon consideration of available positive and negative evidence, which includes, among other things, the Company’s most recent results of operations and expected future profitability. Based on the Company’s cumulative losses in recent years, a full valuation allowance against the Company’s deferred tax assets as of December 31, 2019 and 2018 has been established as Management believes that the Company will more likely than not realize the benefit of those deferred tax assets. Therefore, no tax provision has been recorded for the years ended December 31, 2019 and 2018.

 

The Company complies with the provisions of ASC 740-10 in accounting for its uncertain tax positions. ASC 740-10 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely that not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Management has determined that the Company has no significant uncertain tax positions requiring recognition under ASC 740-10.

 

The Company is subject to income tax in the U.S., and certain state jurisdictions. The Company has not been audited by the U.S. Internal Revenue Service, or any states in connection with income taxes. The Company’s tax years generally remain open to examination for all federal and state income tax matters until its net operating loss carryforwards are utilized and the applicable statutes of limitation have expired. The federal and state tax authorities can generally reduce a net operating loss (but not create taxable income) for a period outside the statute of limitations in order to determine the correct amount of net operating loss which may be allowed as a deduction against income for a period within the statute of limitations.

 

The Company recognizes interest and penalties related to unrecognized tax benefits, if incurred, as a component of income tax expense.

Note 13 - Concentrations and Credit Risk
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 13 - Concentrations and Credit Risk

Note 13 – Concentrations and Credit Risk

 

Sales and Accounts Receivable

 

The Company had sales to two customers which accounted for approximately 19% and 12%, respectively of total sales for the year ended December 31, 2019. The two customers accounted for less than 10%, respectively of accounts receivable at December 31, 2019.

 

The Company had sales to three customers which accounted for approximately 20%, 16% and 14%, respectively of total sales for the year ended December 31, 2018. One of the three customers accounted for 11% of accounts receivable at December 31, 2018.

 

Cash

 

Cash is maintained at a major financial institution. Accounts held at U.S. financial institutions are insured by the FDIC up to $250,000. Cash balances could exceed insured amounts at any given time, however, the Company has not experienced any such losses. The Company did not have any interest-bearing accounts at December 31, 2019 and 2018, respectively.

Note 14 - Related Party Transactions
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 14 - Related Party Transactions

Note 14 - Related Party Transactions

 

Due to Related Parties

 

Due to related parties with balances of $128,477 and $0 at December 31, 2019 and 2018, respectively, do not bear interest and are payable on demand. The Company’s former subsidiary, Arcmail owed amounts on a credit card that is guaranteed by the husband of the Company’s Chief Financial Officer, who was held personally responsible by the credit card company for the unpaid balance.

 

During the first quarter of 2019, the Chairman Warren Hosseinion made a $300,000 equity investment and was issued 21,590 warrants pursuant to the Equity Private Placement Memorandum.

 

During the first quarter of 2019, Director Mark Fawcett made a $50,000 equity investment and was issued 3,598 warrants pursuant to the Equity Private Placement Memorandum.

 

In November 2019, the Company entered into promissory notes with Chairman John Waters for proceeds of $132,500 and was issued 24,245 warrants pursuant to the Convertible Debt Offering of November 19, 2019.

 

In November 2019, the Company entered into a promissory note with Director Lawrence Schimmel for proceeds of $30,375 and was issued 3,415 warrants pursuant to the Convertible Debt Offering of November 19, 2019.

 

In the fourth quarter of 2018, the Company loaned Qualmetrix, Inc. $116,964 included in long-term assets in the accompanying consolidated balance sheets.  In March 2019, the Company, through its wholly-owned subsidiary Clinigence Holdings, Inc., acquired the assets and operations and assumed the liabilities of Qualmetrix, Inc.  During the year ended December 31, 2018, the Company entered into service contracts with Qualmetrix whereby it compensated Qualmetrix $90,000 per year.

 

In 2018, the Company received convertible debt proceeds totaling $404,997 from related parties.  The terms of the convertible debt are discussed in more detail in Note 9.

Note 15 - Commitments and Contingencies
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 15 - Commitments and Contingencies

Note 15 – Commitments and Contingencies

 

Employment Arrangements With Executive Officers

 

Effective October 29, 2019, in connection with the merger with Clinigence Health, the Company entered into employment agreements with Jacob Margolin, Lawrence Schimmel, and Elisa Luqman each under a three-year term at a base salary of $180,000, $180,000 and $150,000, respectively plus customary employee benefits.

 

Effective April 1, 2017, in connection with the acquisition of HealthDatix Inc., the Company entered into employment agreements with Jerry Robinson, MaryJo Robinson, and Kathleen Shepherd each under a three-year term at a base salary of $75,000 per year, bonuses based upon objectives set by the Company, and participation in all benefit programs generally made available to HealthDatix employees. The employment agreements restrict the executive officers from engaging in certain competitive activities for the greater of 60 months from the date of the agreements or two years following the termination of their respective employment.

Note 16 - Subsequent Events
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 16 - Subsequent Events

Note 16 – Subsequent Events

 

The Company evaluated its December 31, 2019 consolidated financial statements for subsequent events through the date the consolidated financial statements were issued.

 

As a result of the spread of the COVID-19 coronavirus, economic uncertainties have arisen which are likely to negatively impact operations. Other financial impact could occur though such potential impact is unknown at this time. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.

 

During the first quarter of 2020, the Company issued 628,678 options for services, including 446,674 options issued to directors and officers.

 

Financing Transaction

 

On April 21, 2020, the Company received loan proceeds of $333,125 pursuant to the U.S. Small Business Administration (“SBA”) COVID-19 Paycheck Protection Program (PPP). Under the terms of this program, loan proceeds may be forgiven if used for payroll costs, rent, and utilities within 8 weeks of receipt.

 

Discontinued Operations

 

On April 21, 2020 (effective March 1, 2020) the Company completed the sale of HealthDatix, Inc., a Florida corporation (“HDX FL”) to Jerry Robinson, Mary-Jo Robinson and Kathleen Shepherd  (“HDX Management”) in accordance with a Stock Purchase Agreement (the “Purchase Agreement”) by and between the Company and HDX Management.  Pursuant to the Purchase Agreement, the total consideration paid for the outstanding capital stock of HDX FL was the execution of Settlement and Release Agreements by HDX Management, releasing the Company from all obligations pursuant to certain HDX Management Employment Agreements dated April 1, 2017.   As per the Purchase Agreement, the Company’s operations of HDX FL ended February 28, 2020 and HDX Management’s operation of the business is effective as of March 1, 2020.

Note 2 - Summary of Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2019
Policy Text Block [Abstract]  
Principles of Consolidation

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Clinigence Health, Inc., and HealthDatix Inc.All intercompany accounts and transactions have been eliminated.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Fair Value Measurements

Fair Value Measurements

 

The Company adopted the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

 

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.

 

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level 1 – quoted prices in active markets for identical assets or liabilities

 

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

 

Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

Convertible Instruments

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

Revenue Recognition

Revenue Recognition

 

Revenue is generated primarily by software licenses, training, and consulting. Software licenses are provided as SaaS-based subscriptions that grants access to proprietary online databases and data management solutions. Training and consulting are project based and billable to customers on a monthly-basis or task-basis.

 

Revenue from training and consulting are generally recognized upon delivery of training or completion of the consulting project. The duration of training and consulting projects are typically a few weeks or months and last no longer than 12 months.

 

SaaS-based subscriptions are generally marketed under multi-year agreements with annual, semi-annual, quarterly, or month-to-month renewals and revenue is recognized ratably over the renewal period with the unearned amounts received recorded as deferred revenue. For multiple-element arrangements accounted for in accordance with specific software accounting guidance, multiple deliverables are segregated into units of accounting which are delivered items that have value to a customer on a standalone basis.

 

On January 1, 2019, the Company adopted the new revenue recognition standard Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, using the modified retrospective method. The modified retrospective adoption used by the Company did not result in a material cumulative effect adjustment to the opening balance of accumulated deficit. Revenue from substantially all the Company’s contracts with customers continues to be recognized over time as performance obligations are satisfied.

 

The Company provides its customers with software licensing, training, and consulting through SaaS-based subscriptions. This subscription revenue represents revenue earned under contracts in which the Company bills and collects the charges for licensing and related services. The Company determines the measurement of revenue and the timing of revenue recognition utilizing the following core principles:

 

1.Identifying the contract with a customer;
2.Identifying the performance obligations in the contract;
3.Determining the transaction price;
4.Allocating the transaction price to the performance obligations in the contract; and
5.Recognizing revenue when (or as) the Company satisfies its performance obligations.

 

Revenues from subscriptions are deferred and recorded as deferred revenue when cash payments are received in advance of the satisfaction of the Company’s performance obligations and recognized over the period in which the performance obligations are satisfied. The Company completes its contractual performance obligations through providing its customers access to specified data through subscriptions for a service period, and training on consulting associated with the subscriptions. The Company primarily invoices its customers on a monthly basis and does not provide any refunds, rights of return, or warranties to its customers.

Advertising Costs

Advertising Costs

 

The Company expenses advertising costs as incurred. Advertising costs of $115,647 and $0 were charged to operations for the years ended December 31, 2019 and 2018, respectively.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

Cash and cash equivalents are comprised of cash and highly liquid investments with original maturities of 90 days or less at the date of purchase. The Company does not have any cash equivalents as of December 31, 2019 and 2018. The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured.

Accounts Receivable

Accounts Receivable

 

The Company analyzes the collectability of accounts receivable from continuing operations each accounting period and adjusts its allowance for doubtful accounts accordingly.  A considerable amount of judgment is required in assessing the realization of accounts receivables, including the creditworthiness of each customer, current and historical collection history and the related aging of past due balances.  The Company evaluates specific accounts when it becomes aware of information indicating that a customer may not be able to meet its financial obligations due to deterioration of its financial condition, lower credit ratings, bankruptcy or other factors affecting the ability to render payment.

Inventory

Inventory

 

Inventory consisting of finished products is stated at the lower of cost or net realizable value.

Property and equipment and depreciation

Property and equipment and depreciation

 

Property and equipment are stated at cost. Maintenance and repairs are charged to expense when incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income. Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets as follows:

 

Office equipment and fixtures   5 - 7 years 
Computer hardware   5 years 
Computer software   3 years 
Development equipment   5 years 
Amortization

Amortization

Intangible assets are amortized using the straight line method over the estimated lives of the respective assets as follows:

 

Developed technology   13 years 
Customer relationships   10 years 
Long-Lived Assets

Long-Lived Assets

 

The Company assesses the valuation of components of its property and equipment and other long-lived assets whenever events or circumstances dictate that the carrying value might not be recoverable. The Company bases its evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, the Company determines whether an impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the estimate of undiscounted cash flows during the estimated useful life of the asset is less than the carrying value of the asset, the Company recognizes a loss for the difference between the carrying value of the asset and its estimated fair value, generally measured by the present value of the estimated cash flows.

Deferred Revenue

Deferred Revenue

 

Deposits from customers are not recognized as revenues, but as liabilities, until the following conditions are met: revenues are realized when cash or claims to cash (receivable) are received in exchange for goods or services or when assets received in such exchange are readily convertible to cash or claim to cash or when such goods/services are transferred. When such income item is earned, the related revenue item is recognized, and the deferred revenue is reduced. To the extent revenues are generated from the Company’s support and maintenance services, the Company recognizes such revenues when services are completed and billed. The Company has received deposits from its various customers that have been recorded as deferred revenue and presented as current liabilities in the amount of $165,560 and $0 as of December 31, 2019 and 2018, respectively.

Stock-Based Compensation

Stock-Based Compensation

 

The Company accounts for its stock-based awards granted under its employee compensation plan in accordance with ASC Topic No. 718-20, Awards Classified as Equity, which requires the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value on the date of grant and recognition of compensation expense over the related service period for awards expected to vest.  The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock options and warrants. The Black-Scholes option pricing model requires the input of highly subjective assumptions including the expected stock price volatility of the Company’s common stock, the risk free interest rate at the date of grant, the expected vesting term of the grant, expected dividends, and an assumption related to forfeitures of such grants.  Changes in these subjective input assumptions can materially affect the fair value estimate of the Company’s stock options and warrants.

Income Taxes

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC Topic No. 740, Income Taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

 

The Company applies the provisions of ASC Topic No. 740 for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the Company’s financial statements. In accordance with this provision, tax positions must meet a more-likely-than-not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

We have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the condensed consolidated financial statements as a result of future adoption.

Note 1 - Organization and Basis of Presentation (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table represents the fair value of the consideration paid allocated to the assets and liabilities acquired in applying the acquisition method for the completion of the reverse merger:

 

Consideration:   
Issuance of 797,108 shares of common stock  $836,963 
Net liabilities assumed   1,467,897 
Total consideration  $2,304,860 
      
Assets Acquired:     
Current assets  $46,209 
Property, equipment, and other non-current assets   1,593 
Goodwill   2,257,058 
Total assets acquired  $2,304,860 

 

The following table represents the fair value of the consideration paid allocated to the assets and liabilities acquired in applying the acquisition method for the completion of the Qualmetrix, Inc. business combination:

 

Consideration:   
Issuance of 5,021,950 shares of common stock  $4,168,219 
Net liabilities assumed   989,805 
Total consideration  $5,158,024 
      
Assets Acquired:     
Current assets  $24,698 
Property, equipment, and other non-current assets   7,818 
Identifiable intangible assets   1,654,000 
Goodwill   3,471,508 
Total assets acquired  $5,158,024 
Note 2 - Summary of Significant Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Schedule of estimated lives of respective assets

Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets as follows:

 

Office equipment and fixtures   5 - 7 years 
Computer hardware   5 years 
Computer software   3 years 
Development equipment   5 years 
Schedule of estimated lives of the respective assets

Intangible assets are amortized using the straight line method over the estimated lives of the respective assets as follows:

 

Developed technology   13 years 
Customer relationships   10 years 
Note 4 - Property and Equipment (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Schedule of property, plant and equipment

Property and equipment are carried at cost and consist of the following at December 31, 2019 and 2018:

 

   2019  2018
Office equipment and fixtures  $109,468   $13,327 
Computer hardware   44,866    7,941 
Computer software   16,121    —   
Less: Accumulated depreciation   87,102    13,656 
   $83,353   $7,612 
Note 5 - Intangible Assets (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Schedule of intangible assets

The following tables provide detail associated with the Company’s acquired identifiable intangible assets:

 

   As of December 31, 2019
    

Gross Carrying

Amount

    

Accumulated

Amortization

    

Net Carrying

Amount

    

Weighted

Average

Useful Life

(in years)

 
Amortized intangible assets:                    
Customer relationships  $624,000   $(52,000)  $572,000    10 
Developed technology   1,030,000    (66,026)   963,974    13 
Total  $1,654,000   $(118,026)  $1,535,974      

 

Aggregate Amortization Expense:   
For the year ended December 31, 2019  $118,026 
Note 6 - Operating Lease (Tables)
12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Operating lease ROU assets and operating lease liabilities

Operating lease ROU assets and operating lease liabilities are recorded on the consolidated balance sheet as follows:

   December 31,
   2019
Operating Lease:     
Operating lease right-of-use assets, net  $247,196 
Current portion of operating lease liabilities   50,406 
Operating lease liabilities, net of current portion   223,618 
Schedule of Future Minimum Rental Payments for Operating Lease

The following table summarizes maturities of operating lease liabilities based on lease term as of December 31, 2019:

 

2020  $67,371 
2021   69,393 
2022   71,474 
2023   73,619 
2024   37,729 
Total lease payments   319,586 
Less: Imputed interest   45,562 
Present value of lease liabilities  $274,024 
Schedule of future minimum payments due under the non-cancelable lease

At December 31, 2019, the Company had the following future minimum payments due under the non-cancelable lease:

 

2020  $67,371 
2021   69,393 
2022   71,474 
2023   73,619 
2024   37,729 
Total minimum lease payments  $319,586 
Summary of cash paid and related right-of-use operating lease

The following table summarizes the cash paid and related right-of-use operating lease recognized for the year ended December 31, 2019.

 

   Year Ended
   December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:     
Operating cash flows from operating leases  $27,387 
Right-of-use lease assets obtained in the exchange for lease liabilities:     
Operating leases   11,238 
Note 7 - Earnings (Loss) Per Common Share (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Computation of diluted net income (loss) per share

The Company’s potentially dilutive shares, which include outstanding common stock options, common stock warrants, and convertible debt have not been included in the computation of diluted net loss per share for the years ended December 31, 2019 and 2018 as the result would be anti-dilutive.

 

   Years Ended
   December 31,
   2019  2018
Stock options   48,854    —   
Stock warrants   1,065,251    138,997 
Total shares excluded from calculation   1,114,105    138,997 
Note 8 - Stock Based Compensation (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Schedule of stock option activities

Stock option activity during the years ended December 31, 2019 and 2018 follows:

 

   Options Outstanding  Weighted Average Exercise Price  Weighted Average Remaining Contractual Life (Years)
Options outstanding at December 31, 2017    —      $ —        —    
No option activity    —        —        —    
Options outstanding at  December 31, 2018   —      —      —   
Options granted   48,854    5.11      
Options outstanding at  December 31, 2019   48,854   $5.11    8.05 
Schedule of stock options outstanding

Options outstanding at December 31, 2019 consist of:

 

Date Issued  Number Outstanding  Number Exercisable  Exercise Price  Expiration Date
August 5, 2019   44,854    44,854   $5.56   August 5, 2029
October 29, 2019   400    400   $0.01   March 24, 2020
October 29, 2019   3,600    3,600   $0.0725   June 6, 2027
Total   48,854    48,854         
Schedule of Warrants, Activity

Warrant activity during the years ended December 31, 2019 and 2018 follows:

 

  

Warrants

Outstanding

 

Weighted Average Exercise

Price

  Weighted Average Remaining Contractual Life (Years)
Warrants outstanding at December 31, 2017   91,365   $0.44    1.58 
Warrants granted   47,632    1.50      
Warrants outstanding at December 31, 2018   138,997   $0.81    5.55 
Warrants granted   1,065,251    6.04      
Warrants cancelled   (138,997)   0.81      
Warrants outstanding at December 31, 2019   1,065,251   $6.04    5.17 
Schedule of Outstanding Warrants

Warrants outstanding at December 31, 2019 consist of:

 

Date Issued  Number Outstanding  Number Exercisable  Exercise Price  Expiration Date
March 21, 2019   96,433    96,433   $6.67   December 31, 2024
April 30, 2019   3,598    3,598   $6.67   December 31, 2024
May 13, 2019   14,393    14,393   $6.67   December 31, 2024
May 28, 2019   199,703    199,703   $6.67   December 31, 2024
June 5, 2019   7,197    7,197   $6.67   December 31, 2024
June 25, 2019   208,361    208,361   $6.67   December 31, 2024
September 6, 2019   25,188    25,188   $6.67   December 31, 2024
October 29, 2019   1,500    1,500   $25.00   February 5, 2023
October 29, 2019   1,500    1,500   $25.00   April 27, 2023
November 15, 2019   39,000    39,000   $1.25   October 31, 2025
November 15, 2019   204,651    204,651   $5.56   October 31, 2025
November 19, 2019   260,312    260,312   $5.56   October 31, 2025
December 31, 2019   3,415    3,415   $5.56   October 31, 2025
Total   1,065,251    1,065,251         
Note 9 - Convertible notes payable (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Schedule of Convertible notes payable

Convertible notes payable consisted of the following at December 31, 2019 and 2018:

 

   2019  2018
Notes payable convertible into CLNH common units at $.44 per unit; nominal interest rate of 5%; matured in March 2019  $—     $200,000 
Notes payable convertible into CLNH common units at $.59 per unit; nominal interest rate of 12%; matured at various dates from August 2019 to August 2021; converted in May 2019   —      399,996 
Notes payable convertible into Clinigence common shares at $5.56 per share; nominal interest rate of 10%; maturing in October 2020   2,016,723    —   
Notes payable convertible into Clinigence common shares at $1.25 per share; nominal interest rate of 10%; maturing in October 2020   95,337    —   
Total convertible notes payable   2,112,060    599,996 
Current portion   (2,112,060)   (300,000)
Total convertible notes payable, net  $—     $299,996 
Note 10 - Note Payable (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Notes payable

Notes payable consisted of the following at December 31, 2019 and 2018:

 

   2019  2018
Notes payable with maturities between six months and twelve months from the date of issuance with annual percentage interest rates between 24% and 31%  $63,226   $63,448 
Demand note payable issued to former officers of Qualmetrix, Inc. with an annual percentage interest rate of 8%   16,200    —   
Note payable issued in May 2013 with a maturity date of May 2023 and interest rate of Prime + 2% (6.75% and 7.5% at December 31, 2019 and 2018, respectively)   —      267,137 
Note payable issued in June 2017 with a maturity date of June 2022 and effective interest rate of 10.66%   287,507    449,194 
Total notes payable   366,933    779,779 
Current portion   (366,933)   (177,055)
Total notes payable, net  $—     $602,724&#